health insurance and work

Healthcare / health insurance in the US is so disordered right now that no matter what they do in Washington, it’s not going to help, and my Patient Husband pointed out why.

(To be fair, he said he read this somewhere, but it resonated.)

The point where health insurance in the US became disordered was in the 1950s when Congress offered tax incentives to employers who offered health insurance to their employees.  Think about that: if you’re like me, an American under the age of about 50, you assume your  heath insurance comes through your employer.  But there’s no reason it has to be that why, and apparently this is how that situation came to be.

Once employers were the ones purchasing health insurance, rather than individual payers, the insurance companies could drive up prices. They could offer fewer services and the members couldn’t react. Once the prices went up, the doctors and hospitals knew they could charge more too.

You’d see the same thing happening if you had offered employers a tax incentive to provide their employees a car.  Prices of cars would escalate into the hundreds of thousands of dollars because corporations could buy in bulk; the unemployed would have no cars; the DMV would be administered through the human resources department. Drivers licenses would be given to those with proof of employment. Cars would only be offered in two or three colors and with a couple of option packages.  Thus the marriage of two things never meant to go together.

If this is right, then the way to salvage health insurance would be to remove the employer connection and throw it open to everyone to buy his own. That would let the free market determine the prices, let the insurance companies develop plans that would meet the needs of the people and be affordable by most of us. The same way we buy cars based on our needs and our wants, we could do the same with health insurance if it were reasonably priced and the plans were geared toward the kinds of things real families needed.

ANd they would have to be reasonably priced or people couldn’t afford them at all. This pre-existing condition nonsense would vanish if you could choose your plan freely: who would opt for that when another company didn’t have that restriction? And if your plan refused coverage of something they said they’d cover just because it was expensive, you’d find another plan. You’d tell your friends and they’d find another plan too.

But because the unions would have a heart attack about this solution (and did, as I understand, oppose single-payer plans) then the chief disorder about our health insurance crisis is going to remain.  Nothing Washington does is going to change that.

Cynical? Yes. But realistic? In this case, I think so.


  1. Ivy

    I am for a free-market solution too, with charity organizations taking up the burden for those who simply can’t afford it, much the same way they offer food, clothing and shelter for those who simply can’t afford it.

    The other thing that messed stuff up is the insurance negotiated rates. Let’s say a blood test costs (in terms of supplies and salary) $5. The lab wants to make $35. In order to do this, they have to charge $700, so that they can still keep $35 after the insurance forces them to cut the price for their network. That means the uninsured pay $700 for a $35 test. Look at any insurance statement and see how wild the difference is between the charge and the negotiated rate. Those charges are inflated in expectation of that.

    What I’d like to see is a “one price” law. Let’s say you go into Starbucks and buy a cup of coffee. I go into the same Starbucks and buy the same coffee. Five thousand people all go into that Starbucks and all buy that coffee. If you paid $4, I know I’ll pay $4 and all five thousand of us will pay $4.

    On the other hand, if you go for a blood test, you might pay $2, me at the same doctor might pay $3 and some uninsured person might pay $950. That’s crazy.

    Now I’m not saying price fixing. I expect to pay more at the Starbucks on Broadway, a block off Wall Street than I would at one just at the edge of town in Durham North Carolina. Similarly, I expect to pay more for a blood test in Manhattan than in Montana.

    In that same vein (pardon the pun) if Duncan Donuts wants to charge less for coffee than Starbucks, that’s their business plan and their right. If Starbucks wants to raise, or lower, their prices that’s fine too. It’ll still be one item at one location is one price. So Dr. McCoy could charge less than Dr. Doom to compete, and people can choose based on price and quality, but a blood test done by Dr. McCoy in his Iowa office is the same price for all patients. And that goes across all services.

    Then if Dr. McCoy wants to join Super Popular Insurance Network, and SPIN has as negotiated rate $2.50 for blood work, he has to lower his price to $2.50 for all patients.

    Competition, choice, ease of availability of relevant information, and one set price by provider by location (set by the provider) will fix things in ways Washington cannot.

    1. philangelus

      When can I elect you? Actually, can you use your Yarn Controlling powers to make this happen? Have them print the law on linen paper and then you can rearrange the fibers so it says something that makes sense.

  2. cricketB

    Disclosure. I’m from Ontario, where basic health care has been paid by the government for ages. It’s not perfect, but overall it’s pretty good.

    The “pre-existing condition” clauses won’t vanish in a free market. If a client will almost certainly cost you $500k (one heart attack) in the next ten years, how much would you charge him for insurance? Probably $100k/year. (There’s a 50/50 chance you’ll only collect 5 years from him.)

    His neighbour, who will most likely only cost you $10k over the same ten years, won’t pay you that much.

    One of the reasons group plans are cheaper for those who have a pre-existing condition is that the healthy people are subsidizing them. The Ontario plan is essentially a very large group. Yes, the healthy people subsidize those with pre-existing conditions, but there are millions of us. Also, our premiums don’t go up when we acquire a condition (like age) or our employer downsizes.

    In Ontario, the government decides what they’ll pay for a service. The lab can’t charge one price to one company and another price to a different one because there’s only one client. Yes, the government and those providing services don’t always agree on the value, but it’s only one client to negotiate with.

    Some services aren’t paid for. Their regulatory body or professional association sets the standard fees. They police their own members, so they don’t under-cut each other.

    I don’t know nearly enough about the existing American system, the new system, and the transition, to know if the new system will work, but I do know that our system works reasonably well. I’m happy to pay the extra taxes / insurance premiums.

    I dislike relying on charities. It’s harder to track each client, to make sure they don’t take money from two charities for one condition. It’s also harder for people who are new to an area, or aren’t associated with a charity. I’d feel very uncomfortable asking for help from a church I don’t already attend. Also, each charity would have to decide which group of people to help, and for which services. I can see a family having to go to several charities to get complete coverage.

    The problem I foresee with the new law is an increase in demand. People who couldn’t afford it before will now compete with those who could for the existing supply. It will even out eventually, but until then the resources will be stretched pretty thin.

    1. Ivy

      The increased demand will be a good thing and a bad thing. I was speaking on Plurk with a lady who has a friend who suicided because she was diagnosed with breast cancer, no insurance, no way to pursue treatment.

      I have an online friend with severe asthma and no insurance, so no way to even get a prescription for albuterol, never mind actually getting the medicine ($300 and up if you have no insurance).

      A man on a forum I’m on had a severe nut allergy and couldn’t afford an epi pen–again, no insurance. He had a tuna sandwich from a place he’d gone to before and one bit of walnut was in the sandwich (it probably fell from the chicken salad into the tuna salad). An easily manufactured medicine could have saved his life. His wife posted his obituary a few days ago. He left behind a wife and two small children.

      So if I’m told I have to wait a little while to get my routine exam (I’m in perfect health baruch hashem) so that someone who truly needs medical attention can get it, that’s fine.

      A lot of the debate has been around socialized health care, like Canada has. It’s nice to hear from someone who has real life experience with such a system. What kind of services aren’t covered?

      1. cricketB

        The usual fine print applies. I’m no expert. Some things to shift on and off the list with pre-election promises. We’re healthy and the same demographic as most taxpayers.

        All medical doctor visits are covered, including home visits if absolutely required. This extends to nurse practitioners. This includes reassurance visits and routine physicals.

        Tests are free at the recommended frequency. They won’t pay for routine blood work every month if you’re basically healthy, but they will pay if the doctor thinks you need it.

        Doctors bill the province based on your health card number. They can bill you directly for a missed appointment.

        Notes to employers and copies of charts aren’t covered. Forms for insurance or work aren’t covered. Visits and tests required by your employer aren’t covered (except for what would normally be covered).

        Most things in a hospital are covered, including medicine, doctors, nurses and laundry. Ward rather than private. Plaster cast rather than fibreglass. Not sure about purely elective cosmetic surgery, but a lot of reconstructive is covered.

        Things that are normally done in a hospital but sometimes done elsewhere are covered. This includes home births and doctors with mini-surgeries. Not sure about hospice care — it’s probably mixed.

        Midwife and assistant are covered, doula is not. My total cost for a baby was clothes to bring him home in. That included all pre- and post-natal visits, delivery, and two lactation consultations.

        Self-administered medicine isn’t covered, but if you’re low-income and have ongoing expensive meds there’s a program. Allergy shots aren’t covered. I’m not sure about cancer meds, even if administered in hospital.

        My brother’s pacemaker, including equipment and labour, was covered. His only expenses were the daily medicine and travel.

        Eye exams are only covered if you’re at risk, which includes under 18, over 65, and diabetes. Glasses are not covered.

        Dentists aren’t covered. I think they should be, but it would be a big sudden increase to the provincial budget. I think dental surgery that requires more than a local anesthetic is covered.

        Ambulances are covered if it’s appropriate. Kid or senior with broken leg is appropriate. Can’t be bothered to drive is not — they’ll still take you, but you get a bill. The drivers have discretion.

        Hearing tests and hearing aids aren’t covered. Not sure if test is covered post-surgery.

        Chiropractors, physiotherapist, and most “therapy” is not covered.

        Infant and pre-school autism treatment is covered on paper, but they save money by denying the value of early intense treatment. Then the school is responsible, and they do the same denial.

        Infant and pre-school speech therapy is covered. We got 25 hours or so free for our son. Again, once they reach school-age the school takes over, or not, depending on funding.

        All vaccines required for school are covered. Flu shots are covered (and this year they didn’t require your health card — they wanted to stop transmission). Vaccines for travel aren’t.

        I think medical costs incurred elsewhere are covered to the limit they would be in Ontario, but I usually buy travel insurance. We’re told (by the travel insurance people) that the same service in the States is much more expensive.

        There is an independent medical group that defines “basic medical care”.

        We’re not covered for everything, and they try to save money by increasing wait times (probably like they do in the States), but they answer to the tax payers.

        Most employers have group insurance for dental, prescriptions, eyes, and therapy. It’s not perfect, and usually reaches the limit just as things get expensive, but it’s a start.

  3. knit_tgz

    Here in Portugal too. Everybody has public health services that cover the basics (no dentist, alas, and of course if 2 options have the same risks they go for the cheaper, so if I have a benign mole to remove they will go scalpel, not laser) and some employers offer group insurance. Public health is not completely free, but it’s mostly affordable, and they have a special card for really poor people, the elderly, pregnant women and blood/organ donors (the latter is just to help increase the number of donors) so that we pay even less. Not all medication prescribed from public health is subsidized (most the medication for my skin condition isn’t subsidized, but then again, it’s not a endangering condition), but all serious diseases medication is subsidized (Thank God, also. I have been going through depression, and I could never pay the full amount of my meds cost, but as it was prescribed by a public doctor I pay less than 1/3). No diabetic, people with allergies or cancer patient needs to go untreated here.

    Private health is thriving because public health has longer wait times (except for urgent cases who, thank God, are now mostly cared for almost immediately) and because public health care is no-frills (you don’t get to be interned in a nice room with a bed for visits, etc). But private health does not cover the really expensive treatments unless you have a really expensive insurance. So, everybody except the really rich people go to public health for really serious conditions. Middle class people usually can afford to go to private clinics (nicer, and faster) for non-urgent treatment or elective care (cosmetic surgeries, for instance, while breast reductions and reconstruction surgeries are covered in public health). Rich people can afford the really nice clinics even for expensive operations, of course, so that the rooms are almost as nice as hotel rooms, a bed for visits is included, and a nicer atmosphere. But public hospitals have good doctors too (though there are some bad ones, as everywhere else), even though they’re less comfortable.

    Of course, our system isn’t perfect too, but it’s not bad. I would never want the public health system taken away from us.

  4. Ken Rolph

    I am puzzled when I hear people talk about the government paying health costs. Where do they think the government gets the money? From us. Government is only a mechanism we use for organising things in society which are too big for individuals and groups to handle.

    In Australia the Medicare levy is 1.5% surcharge on taxable income, with exemptions for low income earners. Essentially we look after each other. In practice we make co-contributions at all levels, wherever we are able. I’ve never had to threaten any health employee with a charge of fraud to get ordinary services.

    We don’t let private companies advertise their drugs on the media. The Pharmaceutical Benefits Scheme is a filter which only allows money to be spent on the most cost effective and efficacious drugs. I normally pay about $33 for a prescription. The year I had my nose operated on so I could breathe properly we piled up a lot of bills. Just before Christmas my pharmacist told me that I was on the Safety Net. I got a card which allowed me to get prescriptions for $5.30. The system would only let me take my regular prescriptions at the regular times, so I couldn’t stock up. On January 1 I was off the Safety Net and back to normal.

    I anticipate that in coming years I will end up on the Safety Net card earlier each year. But the system is set up to make sure everyone can get health care while making whatever contribution they are able.

    The Australian government has reciprocal medical arrangements with a lot of other civilised nations, but not the USA. Why is the USA the only advanced nation without a proper health care system? Is it a matter of arrangements or does it arise out of the nature of America itself?

    1. knit_tgz

      Of course, the money to pay for health costs in public health systems comes from contributors (us: the ones in the workforce). It’s a form of mandatory solidarity, if you want…

    2. philangelus

      I agree the USA’s system is busted. I think the unholy marriage between employment and insurance is the backbone of the broken system and is what enables the unfettered costs of medications, procedures, hospitals and doctors.

      The USA scores 33rd in childbirth wellness worldwide, and yet our costs are among the highest. 32 nations score better than us in terms of infant mortality and maternal mortality, and in the end it’s because the system is broken. We have overskilled people in attendance on minor medical needs and treat serious matters as emergencies, make optional conditions mandatory for treatment, and criminalize leaving well enough alone by setting an impossible “standard of care.” And that mentality stretches out to every area of medicine; it’s simply most obvious in maternity care where you’re in general dealing with a healthy woman and a healthy baby.

      I don’t think what they just passed is going to fix the system. I think it’s simply going to create more boondoggles and more headaches and more paperwork, and people will still suffer under the new system in addition to whatever medical ailments caused them to suffer in the first place.

    3. philangelus

      Oh, and the issue of medical malpractice lawsuits is going to make everything more complicated because many doctors overprescribe and overtreat in an attempt to protect themselves from potential lawsuits. That drives up costs even further and clogs up the system.

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